Attack of the Customers Press Release

I’ve read thousands of press releases over the years but don’t believe I ever wrote one until now. It was more difficult than I expected! Links and tweets are appreciated, but Amazon reviews will get you undying devotion.

New Book Explores Recent Epidemic Of Online Customer Assaults on Businesses

 ‘Attack of the Customers’ Helps Marketers and Business Owners Manage and Prevent Reputation Threats Carried on Blogs and Social Networks

Attack of the CustomersCustomers are taking their complaints about companies and products to the Internet in record numbers, and a new book tells what is driving this trend and how businesses can avoid being victims of customer attacks.

Attack of the Customers,” by award-winning author Paul Gillin and customer relationship management pioneer Greg Gianforte, arrives as online attacks are becoming a top concern for business and government leaders.

“A lot of attention has been focused on social media’s capacity to aid in awareness, marketing and positive brand perception,” said co-author Paul Gillin, “but little has been written to date about its dark side. Brands have been piling into Facebook expecting to reap a bounty of positive PR, but they forget that these channels can be used to tear down as well as to build.”

Recent research has shown that 70% of large companies have experienced an attack on their reputations during last two years.“Decision-makers believe that social media has made managing crises more difficult and more expensive,” Gillin said. “We wrote this book to address the increasing need for corporations to understand how people express dissatisfaction online and how to distinguish between everyday complaints and potential crisis scenarios.”

Attack of the Customers analyzes the motivations and goals of people who drive negative campaigns and offers guidance for how to respond to and prevent online attacks. Using dozens of case studies from consumer and B2B brands, the book classifies attackers into four categories – Casual Complainers, Extortionists, Committed Crusaders and Indignant Influencers – and provides coping strategies for dealing with each.

The book also documents step-by-step how some recent notable attacks developed and the critical factors that transformed them from minor brush fires into international news stories.

Capacity to Destroy

Attack of the Customers analyzes customer-driven negativity campaigns like the 2010 Pampers Dry Max Facebook crisis and the 2012 beef-industry “pink slime” hysteria to identify lessons brand owners can apply to understanding customer motivations and preparing response strategies. The book also looks at the growing influence of online customer reviews sources like Yelp and Amazon on businesses ranging from electronics to hospitality services and tells how business executives can use peer reviews to their advantage.

Readers will learn:

  • Why businesses’ common responses to customer complaints often make matters worse;
  • Why complaining customers are some of an organization’s most valuable assets;
  • How vocal critics can be turned into raving fans with an active response strategy;
  • How to organize a team to identify and respond to attacks in minutes; and
  • How to create a culture that puts customers first.

“Delighting the customer is the only sustainable source of competitive advantage today, because product differentiation is fleeting and price differentiation is unprofitable, ” said co-author Greg Gianforte. “Failure to deliver exceptional customer experiences is simply failure.”

Attack of the Customers is available through major online retail outlets and in Amazon Kindle format. Learn more at AttackOfTheCustomers.com.

About The Authors

Paul Gillin, co-author, Attack of the CustomersPaul Gillin is a writer, speaker and online marketing consultant who specializes in helping businesses use content to reach customers. A popular speaker and writer, he has addressed more than 150 conferences and groups and published more than 200 articles about social media marketing since 2008. His four previous books about social media and online communities include The New Influencers, Secrets of Social Media Marketing, The Joy of Geocaching and Social Marketing to the Business Customer.

Paul is a columnist for BtoB magazine and a director of the Society for New Communications Research. He blogs at PaulGillin.com and NewspaperDeathWatch.com.

Greg Gianforte, co-author, Attack of the CustomersGreg Gianforte has started five successful software companies. He founded RightNow Technologies in 1997 with a mission to rid the world of bad experiences. The company enjoyed 15 years of continuous growth. At the time of its sale to Oracle in 2011, it had more than 2,000 large customers, 1,100 employees and $225 million in annual revenue.
Among his awards are Ernst & Young’s Pacific Northwest Entrepreneur of the Year and the Leader Award from CRM magazine. He was inducted into the CRM Hall of Fame in 2007. His books include Bootstrapping Your Business and Eight to Great: Eight Steps to Delivering an Exceptional Customer Experience.

Contact information:

Paul Gillin

508-656-0734

paul@gillin.com

Twitter: @pgillin

Greg Gianforte

greg.gianforte@gmail.com

 

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Sensible Talk About Social Media Measurement

Measure What Matters by Katie PaineThe Internet is the most measurable medium ever invented, but the perception that returns on online social interactions can’t be quantified stubbornly persists. Those who still harbor this misconception should do themselves a favor and pick up Measure What Matters, a guide to digital ROI that puts common sense ahead of the current fan/follower frenzy.

I’ll admit my biases up front. I’ve known author Katie Paine since her days as a PR pro in the 1980s and am an unabashed fan. For the past five years I have worked with her closely as a member of the Society for New Communications Research, which awarded her its “Fellow of the Year” distinction in November. I am also quoted on the back cover of the book, although I did not get a chance to read the full volume until recently.

Like many former publicists, Paine has smoothly migrated her relationship-building skills into the social world, but unlike most of her peers she has chosen to specialize in numbers. That’s a good thing for the rest of us because social media marketing, like PR, has always been challenged by the lack of reliable success metrics.

Katie PainePaine (left) believes that anything is measurable if you know where to look, and in this book she offers plenty of ideas. Measure What Matters isn’t about social media as much as it is about the importance of relationships and the need to understand how they equate to success. This is an important point because many of the tools Paine recommends work well in any medium.

In fact, one of her favorite measurement tools – the Grunig Relationship Survey – was invented in the days before blogs and Twitter, but is every bit as useful today as it was a decade ago. Even conventional research tools like mail surveys and focus groups still have their place, Paine argues, despite the fact that many people consider them to be passé. The point isn’t for organizations to argue about tools but to figure out the best ways to measure success. If that means counting mentions of a brand in newspaper headlines, so be it.

Volume 2

Measure What Matters is essentially a revised and expanded version of Measuring Public Relationships, a self-published 2007 title that I reviewed here. This time Paine has a major publisher at her back and the benefit of many new tools to tackle, including Twitter and Facebook. When you scan the table of contents, however, you’ll see nary a mention of those social networks. Instead, the author focuses on identifying constituents, defining messages, selecting tools and reviewing and tracking results. The role of communicators in a democratized media world really hasn’t changed all that much. They still seek to communicate a message or favorable impression. While there are a whole lot more tools they can use to do that today, the noise level is also a whole lot higher.

The book is chock-full of gems, ranging from useful asides like the fact that 40% is a good response rate for an employee paper survey, to the exhaustive list of 27 different types of conversations in chapter 4. The “five phases of engagement” in chapter 5  walks readers through the process of understanding how relationships proceed from initial impression to purchase advocacy. That chapter also features an eight-step process for analyzing social media content that keys in on core issues like understanding how the message was received, how it was interpreted and who did the interpreting. PR veterans will recognize many of the same concepts here that they have been using for years. In some respects, the world hasn’t really changed all that much.

Chapter 11, which looks at crisis communications, imparts basic wisdom that I hadn’t even considered. For example, the definition of “surviving a crisis” is situational. Long after the initial damage has been swept away, the reputational fallout of a crisis may make the company vulnerable to a takeover or limit its ability to attract quality talent. Paine also astutely points out that good relationships with customers, analysts and other influencers may prevent a crisis from occurring in the first place, an outcome that is almost impossible to measure.

The final two chapters look at measurement tactics for nonprofits and educational institutions, two clients with which Paine has extensive experience.

Paine’s practical and time-tested advice is a welcome relief to a Klout-obsessed world that seems more taken with fans and followers than with business results. I highly recommend it.

 

Measuring the Immeasurable

My post last week about the shortcomings of Klout got several thousand views and generated quite a bit of discussion. it also got me several e-mails from companies that claim to have built a better mousetrap than Klout. I haven’t reviewed these tools in detail just yet, but it appears that influence is a red-hot topic in PR and marketing circles right now.

Influence measurement is a natural evolution of conversation monitoring, a discipline that’s personified by Salesforce.com’s Radian6 tool and dozens of competitors. Monitoring is a solid practice that can keep you in touch with the topics and brands people are discussing online. Most tools now also provide some degree of sentiment analysis, which attempts to derive attitudes from comments. Sentiment analysis is devilishly difficult to get right, however. If a teenager calls something “sick,” it’s a compliment. Coming from a 50-year-old, it’s an insult. Most experts I’ve spoken to on this topic say that sentiment analysis tools are at best 70% accurate.

Circle of Influence

Topaz Partners has developed the "Circle of Influence" to depict the different factors that go into decision-making (Click to enlarge). TopazPartners.com

This isn’t stopping vendors from tackling the even more complex issue of Influence analysis. This goes beyond sentiment analysis to attempt to determine a person’s ability to drive action. The problem is that there are lots of variables and intangibles to influence that resist being boiled down to a single number. For example:

  • What is action? A “like” or retweet is a form of action, but not necessarily one that leads to a decision.
  • Online actions have different gravity depending upon the stakes and the effort involved. Writing a comment takes more effort than clicking a “like” button. Posting a blog entry referencing someone else’s words is more involved than writing a comment.
  • Which actions really matter? I have yet to see a tool that can correlate influence with purchases or donations with any degree of certainty. We assume that conversation about a topic influences decisions, but are they the decisions we want? A lot of people have been talking about Hewlett-Packard lately, but I doubt it’s driving profitable sales of HP products.
  • Influence is contextual. If I’m considering buying a Yamaha stereo and find a blog entry from someone who exhibits deep knowledge of the model I’m considering, that person may have a disproportionate influence on my decision, regardless of the number of followers or subscribers he has. The weakness of most influence analysis tools is that they abstract broadly, looking at things like reach and amplification. However, decisions are more likely to be influenced at a micro, rather than a macro level.

One of the most illuminating books I’ve read on this topic is Influencer Marketing by Duncan Brown and Nick Hayes. The authors argue that the influence of media in general, and social media in particular, is greatly overrated. They count no less than 50 kinds of influencers, ranging from resellers to academicians to government officials. Most of them have little or no online visibility, but their knowledge, leverage and/or connections make them enormously influential. What’s more, the larger the purchase, the greater their influence tends to be.

I don’t agree with everything Brown and Hayes say, but I commend them for resisting the urge to oversimplify. Their basic message is that influence and audience are two different things. Celebrities can have huge audiences but little power to affect decisions. Conversely, people with very deep knowledge can have small audiences and great influence. Seth Godin said it well: Small Is the New Big.

In the mainstream media world, audience was associated with influence because we had few tools to understand the true dynamics of decision-making. Our natural tendency is to apply this same metric to online conversations. The danger of this approach is that social media is more about quality than quantity. In the same way that early automobiles had steering mechanisms that mimicked reins, we are applying old assumptions to a new medium. I’m not saying that influence measurement tools are inherently unreliable, but they are attempting to measure what may be immeasurable. Just be skeptical.

Are Exclusives a Good Idea? In a Word: No

Should you give exclusives to journalists? My advice on this has always been unequivocal: No. Exclusives are a bad deal for you in the long-term and make no difference to the audience you’re trying to reach.

This question came up last night during a panel sponsored by the New England Venture Network on which I participated along with several business journalists. I broke with my colleagues on this question, but I firmly believe that exclusives are a bad idea.

Here’s my thinking: Journalists are a competitive bunch and they care deeply about who gets information first. However, no one else does. These days information travels so quickly that its source immediately becomes lost. Outside of a few big stories – such as TMZ’s scoop on the death of Michael Jackson — the public doesn’t remember where a story originated.

Journalists remember, however, and they tend to hold grudges against sources who favor their competition. Public relations is a relationship game. It’s been many years since I pounded a beat, yet I still remember a few PR people who gave stories to my competition. It’s safe to say that I never treated those people quite the same again. I’m not proud of that fact, but the reality is that it’s difficult to be chummy with someone whom you believe has slapped you in the face.

There are isolated incidents when an exclusive might work out. One of the audience members last night brought up a recent case in which her company had given The New York Times a scoop on a patent her startup company was about to receive. The story was picked up by many other outlets and she was satisfied with the results. I suppose if The New York Times is willing to promise you prominent coverage, an exclusive may be merited. But what if the story had turned up as a short squib in a “Miscellany” column or been cut by an editor? The PR person would have angered competitors and had little to show for it.

If you’re going to play the exclusive game, at least try to make it a win-win proposition. Perhaps you can offer one reporter a first interview with a customer or your CEO and give another a scoop on pricing or a particular new feature. Or you can promise the reporters you snubbed a first shot at your next big announcement.

In general, though, exclusives make one friend at the expense of making a lot of enemies. I can’t believe they are a good thing for your business in the long term.

How to Calculate Social Marketing ROI

This is a draft of chapter 10 of Social Marketing to the Business Customer by Paul Gillin and Eric Schwartzman. This chapter focuses on how to calculate ROI of social media and Internet marketing programs in general. I’m particularly interested in your feedback on this chapter because it presents some new ideas I’ve been playing with about how to calculate the ROI of almost anything. My biggest concern is that these ideas are overly simplistic. They do assume that a company has a rich set of historical data to work with, which is often not the case.


Please ignore the typos and grammar flaws that invariably appear at this stage.

We’ve told you about a few companies that have achieved a notable return on investment (ROI) from their social marketing initiatives. They include Indium Corp., whose blog-driven search strategy yielded a six-fold increase in leads in just one quarter, and Clickable, whose Gurus drove a 400% one-year growth in billings.

These numbers are impressive, but in our experience, they’re more the exception than the rule. In conversations with hundreds of marketers over the last few years, we’ve observed that few of them closely track the ROI of their social marketing programs. In fact, many of the most successful marketers aren’t that concerned with ROI at all. Rather, they invest in social marketing because they believe that the benefits – customer engagement, market awareness, continuous feedback and professional development – are good for

any company, regardless of the financial impact. They measure like crazy, but they rarely translate the benefits of engagement into hard dollar figures.

Most of these early adopters work for companies with adaptive, change-oriented management. That’s good if you can get it, but the reality is that most top executives are still wary about social marketing. ROI is typically the number one or two most cited concern we hear from the people who work for these companies.

B2B Social Media Metrics

We’re conflicted about the whole ROI debate. On the one hand, we believe that businesses should make decisions based on sound reasoning rather than vague promises or impulse. ROI analysis enforces rigor that leads to better decisions. On the other hand, we believe ROI objections are often used to avoid decisions that executives don’t want to make for other reasons, such as fear of losing control. Few people want to admit that they’re afraid, so they fall back on convenient stalling tactics, of which ROI is a primary one.

The reality is that businesses make decisions without applying hard ROI criteria all the time.  Much of the money that B2B marketers have poured into direct mail campaigns, trade show exhibitions and trade print advertising for the last 50 years has questionable returns. The only reason we make these investments is that these practices are established and businesses are accustomed to them. “ROI calculations don’t work well for social media and they don’t work well for marketing in general,” says Benjamin Ellis, a UK-based serial entrepreneur who now specializes in social marketing.

What’s the return on landscaping, an expensive conference room table or free bagels on Fridays? It may be possible to calculate a payback through extensive customer perception or employee satisfaction analysis, but why bother? We know these investments make people feel better.  If your employees feel better, they do a better job and your customers feel better.

EMC Corp. has been known to charter jets to fly technicians across country in the middle of the night to take care of a customer whose computers are down. Do you suppose the storage giant conducts an ROI analysis before making that decision? Of course not. EMC is a premium-priced provider whose philosophy is to always go the extra mile to take care of the customer. In the aggregate, the company may be able to justify its practices in the form of higher customer satisfaction and repeat sales, but we doubt the support manager who charters the midnight express is required to justify the added expense in advance.

That said, we understand the ROI justification is a hurdle many marketers must clear to get their social programs off the ground. We believe that many social marketing programs can be justified, but the process requires discipline and careful documentation. After all, the Internet is the most measurable medium ever invented. If you can isolate variables, establish correlations and apply a little creativity, it’s remarkable what you can do. In this chapter, we’ll suggest some approaches.

Defining ROI

A lot of marketers would probably like to be in Susan Popper’s shoes. The VP of marketing communications at SAP was recently asked by B-to-B magazine how she is measuring ROI on marketing efforts. Her response: “When [our target audiences comes] to our site, they watch the videos and they are engaging with the content on the site. Our impression-to-visit ratio (as measured by click-through rates) doubled this year versus last year.” That’s an impressive result, but it isn’t a return. In order to compute return, you need to think in financial terms.

According to Wikipedia, ROI is “the ratio of money gained or lost (whether realized or unrealized) on an investment relative to the amount of money invested.” There are two important variables in this equation: Return and Investment. There’s also a third vital term: Money.

Return is payoff as measured in revenue generated or costs avoided. There are other ways to measure return (for example, improvement in customer satisfaction scores), but unless those outputs can be measured financially, they really don’t qualify as considerations in ROI. We believe many of these intangibles actually can be translated into financial terms, and we’ll cover that later in this chapter.

But for now, let’s look at a couple of basic examples. A simple one is an ROI analysis of the impact of hiring a new sales representative. Let’s say the new rep carries a fully loaded cost of $100,000 and delivers $2 million in incremental annual sales revenue at a 10% net profit. In that case, the first-year ROI of hiring the salesperson is 100%, expressed as profit divided by investment:

Cost of sales rep

$100,000

Revenue generated by rep

$2,000,000

Profit margin

10%

Net profit

$200,000

ROI ((net profit – cost)/cost)

100%


We can apply the same type of analysis to cost avoidance. That’s what Pitney Bowes did when a 2007 Postal Service rate increase prompted 430,000 calls from customers. The mailing service provider launched an online forum to deflect some of the most common questions and tracked 40,000 visits in six weeks. Pitney Bowes was able to correlate savings in call center costs and estimate that the forum more than paid for its first-year costs in just a short time.

Let’s say we implement a customer self-service portal as a way to reduce support costs. We assume that the portal will require half of one full-time equivalent (FTE) employee to administer, that the fully loaded cost of that employee is $70,000 and that the portal will enable the company to eliminate one support position at a fully loaded cost of $70,000. Let’s further assume that efficiencies will enable us to reduce administrative support costs to one-quarter of an FTE the second year and 10% the third year. At the same time, the value generated by the community will enable us to cut an additional one-half customer support position each year.

Here’s what the analysis would look like:

Year

Item

Annual

Cumulative

1

Administrative costs

$           35,000

$                    35,000

Savings

$           70,000

$                    70,000

ROI

100%

100%

2

Administrative costs

$           17,500

$                    52,500

Savings

$          105,000

$                  175,000

ROI

500%

233%

3

Administrative costs

$             7,000

$                    59,500

Savings

$          140,000

$                  315,000

ROI

1900%

429%


The portal looks like a good investment, yielding a positive first-year ROI and blowout value in the third year. The cumulative value is also very strong. Even if our annual savings estimates are off by 50%, we’d still get nearly a 10-fold return on operating costs in year three.

These are two simple examples, but they both require confident forecasting based upon accurate historical data. For many companies, that’s far from simple. In the case of the sales rep, we must be able to predict with reasonable certainty that the person can generate $2 million in incremental business in year one. There are a lot of factors underlying that assumption. For example, we assume predictable growth in the overall market and in our growth rate relative to the market. We must be confident that there is $2 million in new business out there to find. In niche B2B markets with a small number of potential customers, that assumption may be optimistic. And then there are unforeseen circumstances: The bankruptcy of a major competitor could move that revenue goal higher, while the emergence of new competition might force us to trim our forecasts.

There are also nuances of calculating net present value, inflation, opportunity cost, return on capital and other fine points of finance that we won’t try to cover here for the sake of simplicity. ROI calculations are rarely a precise science to begin with.

History and Correlation

Good ROI analysis almost always requires accurate historical information, which few companies have, in our experience. Capturing and analyzing historical data requires time and discipline. It’s easy to cast aside analytical tasks when everyone is focused on generating revenue. However, you can’t forecast the future without understanding the past. Historical data also sets a baseline for measuring change. That change can then be measured and compared to actions that may have caused it. If you can correlate action to impact, then you can calculate ROI.

In the example below, lead activity appears to correlate positively with traffic to a company blog. The positive correlation is indicated by the change from baseline, which appears to correspond with the upward movement in blog traffic. Even then, a definitive correlation can’t be established until other factors are eliminated from consideration, such as a promotion or a new advertising campaign.

Positive Correlation of B2B Blog and SalesIdentifying correlations can be a time-consuming process, requiring new variables to be introduced independently of each other so that change can be isolated. However, you don’t necessarily have to test only one variable at a time. With split testing, you can try two different experiments, each targeting a different segment of your customer base.

Suppose you license e-mail marketing services to customers on a subscription basis. For the last three years, your renewal rate has been about 40% annually, so you can reasonably expect that trend to continue. This gives you a baseline from which to test new tactics.

You’re going to try out two new incentives this year to increase renewal rates. One provides a 10% discount on the annual fee to each customer that renews more than one month ahead of deadline. The other provides access to six customer-only educational webcasts during next 12 months for all customers who renew, regardless of timing. Each eligible customer gets one incentive or the other. This should give you a sound indication of ROI because you can compare your results to historical data.

It turns out that both programs are equally successful in boosting renewal rates, but the webcast promotion has a better ROI. That’s because 40% of the renewing customers who were offered the discount renewed before the one-month deadline, which incurred a higher discount obligation. Not only was the webcast promotion more cost-effective, but it carried a predictable cost of about $1,500 per webcast, compared to the variable cost of the discount. The webcast is probably the smarter incentive to offer.

Historic

With 10% discount

With webcast

Expiring customers

100

100

100

Average subscription cost

$             5,000

$                      5,000

$           5,000

Renewal rate

40%

60%

60%

Profit margin

20%

20%

20%

Profit from renewing customers

$           40,000

$                    60,000

$          60,000

Incremental profit from incentive

N/A

$                    20,000

$          20,000

Cost of incentive

N/A

$                    12,000

$           9,000

ROI

N/A

67%

122%


This example presupposes that the company has good data about past renewals, but many companies lack the systems to capture complete data in the first place. A good CRM system is essential. Many excellent solutions are now available on a software-as-a-service basis today, including Salesforce.com, RightNow Technologies and NetSuite. You can find a complete directory at Saas-showplace.com. But choosing the tool isn’t nearly as important as knowing how to put it to work.

Effective CRM requires discipline to capture every customer contact from initial website visit through sale and continuing with ongoing support. That means involving more than just the sales force in the process. To calculate the ROI on social marketing, you need to understand every dimension of the customer relationship, beginning with the action that creates the first contact. It’s not enough to begin tracking when the lead is generated. Marketing should have the systems in place to identify the action that created the lead, whether that’s a search query, e-mail link, customer referral or some other event. Most CRM systems are good at tracking customer activity after leads come in. The difficult job for marketing is figuring out the sequence of events that brought them there.

We can’t emphasize this enough: Being able to predict the future means knowing a lot about the past. If you can’t establish effective baseline expectations, then your forecasts are little more than educated guesses. In order to do ROI right, you need to track every customer contact, not just interactions with the sales force.

Metrics

Web analytics today deliver unprecedented insight about online interactions. The basic features of the free Google Analytics service match the capabilities of products that cost thousands of dollars just a few years ago. Premium services like Webtrends build in sophisticated behavioral and sentiment analysis and can track offsite activity such as a prospect’s comments on Twitter or use of a mobile application. They can even trigger customized e-mails or tweets when a person’s behavior matches certain predefined patterns.

With all this rich data now available, it’s remarkable how many marketers still use the basic metrics of traffic and unique visitors to measure success. We’re not big fans of these measurements; it’s easy to generate spikes of valueless traffic by posting celebrity photos or top-10 lists, for example. In Chapter XX, we listed some common metrics you can use and how they relate to different business goals. We think richer measures such as referring keywords, top content, bounce rate, average time spent on site, pages-per-visit and content analysis yield more actionable insight that will only get better.

The best way to select relevant metrics is to work backwards. Start with sales trends, match them to Web activity and look for the metrics that correlate most closely. Those are the metrics that are most meaningful to you. For example, if an increase in session time spent on site appears to correlate with registrations for a webcast, then that indicates that webcasts resonate with the audience.

You also shouldn’t confine metrics to those which can be measured online. One of the most popular indications of customer satisfaction is the Net Promoter Score (NPS), introduced in 2003 by Fred Reichheld of Bain & Co. Obtaining an NPS requires asking customers a single question on a 0-to-10 rating scale: “How likely is it that you would recommend our company to a friend or colleague?” This simple tactic has been adopted by big B2B companies like General Electric and American Express as a key performance indicator.

You can also choose to monitor classic metrics that have nothing to do with the Internet. These include press mentions, speaking invitations and performance on customer satisfaction surveys.  Metrics also vary by objective. For example, the success of a blog set up to generate leads may be measured by inquiries, time spent on site and to repeat visitors, while one targeted at search optimization may be evaluated based on keyword rankings and inbound links.

For ROI purposes, though, the choice of metrics is less important than your ability to correlate behavior to results. In other words, if certain page views are more valuable than others, then an increase in traffic and session time could be a good starting metric for evaluating ROI. Just be aware that they are imperfect indicators of visitor engagement.

One thing you absolutely need to know, however, is how people reach your site. Unique URLs are a way to measure that. We’re astonished at how many e-mails we still get from brand-name companies that don’t make use of this simple tactic, which enables a marketer to specify a web address that is unique to the e-mail, tweet, wall post or any other message.  Unique URLs use a simple server redirect function to identify the source of an incoming click. They look like this: http://mycompany.23.com/public/?q=ulink&fn=Link&ssid=5155.  Everything after the word “public/” is a unique code that tells where the visitor came from.

Unique URLs enable your analytics software to track inbound traffic from each source separately so you can determine the ROI of each channel. Without unique URLs, visits are simply classified as “direct traffic,” meaning that the source could be a forwarded e-mail, bookmark or an address typed into the browser.

A simple example of how you might use this information is to measure traffic to a landing page and analyze the number of visitors who fill out a registration form according to the referring source. This would show you, for example, that registration rates are twice as high from a newsletter as from a tweet. The value of those registrants divided by the cost of the newsletter is an ROI metric. Unique URLs are also valuable to split testing; you can try out two different invitation messages in the same email and use a different URL for each to measure response to each message.

PUTTING IT ALL TOGETHER

Let’s apply all the factors we’ve described above to two B2B social marketing scenarios. First, we’ll compare the ROI of webcasts to white papers. Start with historical data. What is the conversion rate of webcast viewers versus people who download a white paper? What is the lifetime value of an average customer? Compare the outputs and divide by costs to assess ROI:

Formula for Calculating B2B Social Media ROI

 

 

Let’s assume the following:

·       The average lifetime value of a customer is $50,000 at a 10% profit margin.

·       The average cost of delivering a webcast to 100 registered viewers is $3,000; viewers convert at a 2% rate;

·       The average cost of delivering a white paper to 500 registrants is $10,000; registrants convert at a 1% rate.

Our ROI analysis looks like this:

 

 

Webcast

White paper

Audience size

100

500

Conversion rate

2%

1%

Lifetime profitability

$           10,000

$                    25,000

Cost of acquisition

$             3,000

$                    10,000

ROI

233%

150%


The webcast ROI is superior, but not by much. Armed with this data, we might choose to promote the webcast more aggressively to leverage its stronger ROI. However, another option would be to focus on improving the white paper’s conversion rate. In fact, doubling the rate would drive ROI to 400%, making this a potentially higher return action.

Let’s look at one more example in which we use a blog for lead generation. We know that performance will be slow during the first few quarters until search engine traffic kicks in. Based upon the experience of others, we believe that lead growth will improve steadily as traffic builds. We expect to be at 50 leads per month by the end of the first year and 160 per month by the end of the second. Our historical data tells us that a lead is worth $100. We further estimate our editorial costs at $2,000 per quarter during the first year, doubling to $4,000 during the second. Here’s our analysis of quarterly and cumulative ROI.

 

Leads

Lead value

Cost

Quarterly ROI

Cumulative ROI

Y1Q1

10

$          1,000

$     2,000

-50%

-50%

Y1Q2

25

$          2,500

$     2,000

25%

-13%

Y1Q3

35

$          3,500

$     2,000

75%

17%

Y1Q4

50

$          5,000

$     2,000

150%

50%

Y2Q1

75

$          7,500

$     4,000

88%

63%

Y2Q2

100

$        10,000

$     4,000

150%

84%

Y2Q3

130

$        13,000

$     4,000

225%

113%

Y2Q4

160

$        16,000

$     4,000

300%

144%

This gives us a firm foundation to make the case for investing in the blog. If leads aren’t coming in as quickly as we had estimated, we can adjust costs downward to improve ROI by setting up content-sharing arrangements.

Measuring Intangibles

The trickiest aspect of ROI analysis is accounting for intangibles. These include factors like customer satisfaction, customer loyalty, brand reputation and market influence. Many social marketing projects are justified for these reasons but the outputs are never measured, either because it’s not worth the effort or because the measurements aren’t in place.

In fact, all of these outputs can be measured and have been for years using some of the following tests:

Value

Measurement

Customer satisfaction

Customer surveys; renewal rates; referrals; incremental business; testimonials; Net Promoter Score

Customer loyalty

Renewal rates; incremental business, response rates, event attendance; testimonials; Net Promoter Score

Customer engagement

Newsletter subscriptions; online community activity; response rates; event attendance; testimonials; feedback volume

Reputation

Market share research; awareness research; media citations; analyst research

Market influence

Market share research; lift studies; media/social media citations; speaking invitations; analyst research

Leadership

Attitudinal research; growth rate; media citations; copycat competitors


However, research statistics aren’t sufficient. You have to find a way to translate these measurements into dollars and cents. That’s where creativity comes in handy. Many of the metrics on the right can be mapped to business outcomes, but only if historical data is available to correlate to those changes.

For example, you can calculate the business value of customer loyalty by comparing the revenue derived from customers at different longevity levels, such as five-plus years, three to five years and less than three years. Then look at the support and sales costs allocated to these same customers. You’ll probably find that long-term customers are cheaper to support and have lower sales costs than newer customers. Comparing the ratio of revenue to expense for each longevity segment should give you an idea of where to invest.

What is the business value of reputation? There’s a lot of research to indicate that B2B customers weigh this factor heavily when making buying decisions. A simple telephone survey can identify who these customers are. You can then see where they rank in order of value to your business. If they are near the top (and we believe they will be) then that is compelling evidence that investment in reputation pays off. You can compare the average profitability of these customers versus those who don’t value reputation as highly and see which has more investment upside.

You can even quantify, to some degree, factors that are almost impossible to measure. For example, suppose that a publicity campaign results in five million impressions in mainstream media. By conducting pre- and post-campaign “lift” studies, you can measure changes in awareness. Then drag out the record books to compare previous increases in awareness to corresponding changes in the business, such as lead quality and conversion times. You can quantify the value of those outputs to calculate ROI.

Once again, these analyses require accurate historical data. If you can’t segment your customers according to criteria like these, the justification process is far more difficult. That doesn’t mean it’s impossible, though. Analyst estimates, industry averages and ratios derived from analyzing your competitors and those in other industries may yield similar insights.

How does this all relate to social marketing? We believe it’s critical. The ROI objection is the roadblock you’re most likely to encounter in selling a social marketing initiative. You need to speak the language of your inquisitors. Social marketing has also introduced new cost variables into the business. For example, press tours used to be a standard tactic for increasing market awareness, but today a blog may do the same thing at a much lower cost. In order to understand the true value of these new tools, you need to have a baseline for comparing them to past practices. Get your Excel skills in order, because you’re going to have some explaining to do.


Sidebar –  Valuing Twitter Followers

When marketers get up on stage to describe their social marketing successes these days, they invariably refer to follower and fan totals. On Twitter, follower counts have become a sort of merit badge, despite the fact that anyone can quickly run up that number by simply auto-following everyone who follows them. There are even paid services that inflate follower totals.

What is the true value of a Twitter follower? There is no industry standard to calculate that number, but if you have the right metrics in place, you can do that for your own organization. Here’s how:

Look at the total number of clicks to your site from Twitter in any given month and divide that by the number of tweets you posted. This gives you the average visits per tweet. Once you have this number in hand, you can look at the behavior of visitors who arrive from Twitter and compare it to those who find you from other sources. Look at page views per visit, time spent on site and visitor paths to identify what percentage of Twitter visitors become leads or customers. Using your standard qualifying metrics, you should be able to determine the average value of a Twitter visitor.

For example, if 1,000 visitors arrived from Twitter in a given month as a result of 20 tweets, that yields an average of 50 visits per tweet. If you know that 5% of Twitter visitors register for a download or newsletter, and that the value of an average registrant is $50, then you can calculate that Twitter delivers $2,500 in business value, or an average of $125/tweet. If you have 5,000 followers, then you can also calculate that an average follower is worth 2.5 cents.

This formula is overly simplistic, of course. Not all Twitter followers are created equal. If you want to dive deeper into the mechanics of influence, services like TweetReach.com and Twinfluence.com can calculate the total reach of your followers or tweets according to so-called “second-order followers,” or those who follow the people who follow you. These metrics can also be used to estimate the value of retweets by certain popular members.

This same approach may also be applied to finding the value of Facebook fans, LinkedIn connections, SlideShare followers and the like.

End sidebar




Two Web 1.0 Favorites Still Have Enduring Value

tickertapeTo read all the hype about social media marketing, you might begin to think that traditional communications don’t matter anymore.  That couldn’t be further from the truth.  Social media is nothing more than a new way to reach customers and influencers, and it is very effective in the right circumstances.  However, human behavior has not been changed that much in the last five years, and we shouldn’t forget the value of two stalwarts: e-mail and the press release.

Let’s start with the trusty press release.  In his book, The New Rules Of Marketing & PR, David Meerman Scott points out that Yahoo changed the rules of marketing more than a decade ago when it elected to define press releases as news. Google followed suit and the PR profession has never been the same since. Today, many company searches on Yahoo or Google News turn up Business Wire copy as the top result. Likewise, the raw news feeds syndicated on thousands of publishing platforms across the Internet make little or no distinction between the Associated Press and PR Newswire.

That’s why press releases are still so relevant. Their newsy style, headlines, subheads and inverted-pyramid structure give them a distinctive format that satisfies certain kinds of information needs. These same factors also imbue them with outstanding search engine performance. Press releases are basically magnets for search engines because they have all the elements that those engines value most.

Think of press releases as the archival record of events at your company.  Assign them a special place on your website where they form a timeline of your company’s history.  Keep them brief, stick to the facts and move the nuance and discussion to your social media outposts. Make the press release archive the place that visitors go for official information. For practical value, you still can’t beat this venerable tool.

Permission to Contact

Facebook may be the start page for the under-25 crowd, but for most of us the inbox will be our cyber on-ramp for a long time to come. Just take a look around at your next conference and note how many people are in Outlook or on a BlackBerry.

emailE-mail is assuming a new role in this digitally diversified age: that of aggregator. Organizations are spreading their communications across so many social platforms that e-mail is finding new relevance as the one vehicle that ties everything together. It’s also the single most effective medium for communicating with your current customers.

E-mail has one other huge advantage over most forms of social media: you know who the subscribers are. Members of an opt-in e-mail list give you permission to periodically grab their attention — even if it’s only in a subject line — and deliver a message.  No other form of electronic communication carries with it that element of trust.

I encourage clients to embed e-mail subscription forms on every page of their website and take advantage of every opportunity to add subscribers to their e-mail list.  If you are managing the relationships well, this list should outperform all others.  Just don’t fumble the opportunity by subjecting recipients to sales pitches. Make it useful.

A regular e-mail newsletter is a great place to assemble all of your communications from other channels.  Group and organize this information topically and add in some big-picture perspective on fragmented messages.  Link back to the source material using unique URLs that you can track in your analytics program.  Remember that e-mail is a great way to determine the interests of a set of engaged customers by identifying their click-through behavior.

What do you think? Are new media channels changing the way you use press releases and e-mail marketing?

The Case For Influencer Marketing

I’ve recently worked with several clients on influencer marketing campaigns. These are proving to be popular new complements to traditional PR programs that approach media relations from a completely different perspective. Influencer relations is gaining popularity as the media landscape shifts and domain experts gain prominence.

The media industry is slashing and burning its way through a wrenching transition. There have been more than 5,300 layoffs in the US newspaper industry just this year, and three major dailies with a combined total of more than 400 years of continuous publishing, have closed in just last month.

The situation is just as bad in b-to-b publishing, where more than 275 business magazines have closed since the beginning of 2007, according to BtoB magazine.

Shifting Influence

With mainstream media dwindling at the same time the number citizen publishers is rising, it’s not surprising that individual influencers are becoming a promising target. Even professional editors and reporters are increasingly turning their attention to the blogosphere and Twittersphere as a source of expertise and even news. The first place a reporter goes when looking for sources these days is Google. As a result, popular bloggers are suddenly inundated with media inquiries. This is an opportunity for marketers. Some publications are going even recruiting bloggers to contribute to their branded sites. These financially driven actions are having the effect of amplifying the volume of individual voices.

An influencer relations program seeks to strike up conversations with these domain experts on the assumption that their opinions are reaching increasingly large audiences, both through their own websites and the amplifiers I just described.. This is quite different from a conventional PR campaign, which starts with analysts and journalists on the theory that they are the influencers. We are beginning to rethink this dynamic. Conventional PR will be harder to do in the future as the ranks of staff journalists shrink and the shrinking number who are left struggle with an overwhelming volume of PR pitches.

In contrast, most bloggers get very few inquiries from marketers, and are more likely to spend time listening to what they have to say. This is a pretty appealing option for marketers who are frustrated with being one of the 300 or 400 daily inquiries an already seriously overworked reporter gets.

The Human Touch

So how do you find influencers? There are a number of commercial services that attempt to perform the task programmatically, but my experience has been that they only get you halfway there. It’s not difficult to find someone who writes, podcasts, or tweets about a topic, but assessing that person’s biases and style is an entirely different issue.

For example, in a recent project for a company with a novel approach to weight loss therapy, we discovered that the topic was more controversial than we thought. Some people have very strong opinions about the subject, and pitching the client’s novel approach to them would have been the equivalent of sticking your hand into a beehive.

You also can’t assume that domain experts necessarily want to talk about their domain of expertise. In a recent engagement that looked for pharmaceutical researchers, we found that people with Ph.D.s in that area blog about everything from cooking to environmentalism. In fact, only a minority paid much attention to pharmaceuticals at all.

At this point, there’s no way to ascertain the agenda, biases or voice of influencers without digging in and reading what they have to say. If you don’t do that critical homework, you risk alienating the very people you’re trying to reach. Bloggers expect you to know something about them. Unlike the mainstream media, they don’t understand how the pitch game is played. They know a lot about their subjects and they tend to regard clueless come-ons with disdain.

For now, there’s no substitute for the human touch when it comes to influencer relations campaigns.

The Best of '08

From my weekly newsletter. To subscribe, just fill out the short form to the right.

At this time of year, many publishers and bloggers do one of two things: look ahead at the future or back at the year just ending. Since Joe Pulizzi, Fast Company and iMedia Connection did a great job at social media predictions, I thought I’d rummage through my digital archives and offer my completely unscientific list of what made this year special for me.

Best Social Media Tool - That’s easy. It’s Twitter, the super-simple, deceptively powerful micro-blogging service that has people sharing their lives in 140-character increments. If you still don’t get Twitter, I feel your pain, but anyone who wants to practice marketing in the new media world needs to get with the program. If you need help, I’ll get on the phone with your people and tell them why it’s so important.

Best Social Media Disaster Story — Johnson & Johnson’s well-intentioned Motrin video turned into a PR nightmare thanks to — you guessed it — Twitter. To its credit, J&J earnestly listened, but the marketers’ failure to anticipate negativity and their eagerness to respond too hastily made this a bigger problem than it had to be.

Best New FaceChris Brogan blew out of the pack to become one of the world’s top bloggers thanks to his prodigious output and shrewd self-promotion. He’ll soon hit 30,000 followers on Twitter and the 14,600 subscribers to his blog are a thing of wonder. I don’t know when the guy finds time to sleep. I’m fortunate to work with him on the New Marketing Summit conference and have a chance to learn from his success.

Best BookGroundswell by Josh Bernoff and Charlene Li broke new ground by attempting to apply research and metrics to social media marketing. The book also told some great stories. Conflict of interest prevents me from choosing my own Secrets of Social Media Marketing, but that shouldn’t stop you from buying it!

Best New Software Application — In the ranks of software that tries to bring order to the barely contained chaos that is Twitter, TweetDeck does the best job I’ve seen.

Best Fall to Earth – Forrester reported that corporate enthusiasm for blogging was beginning to wane. That’s not surprising; most big companies do a lousy job of it. Expect retooling and new growth in the new year.

Best Viral Marketing Success – Cindy Gordon told just seven people about Universal Orlando’s plans to launch a Harry Potter theme park. Word of mouth spread the story to 350 million others in a matter of a couple of days. David Meerman Scott has the story.

Best New Product – The Apple iPhone 3G became the first true mobile Internet device and sold 3 million units in its first month. Expect plenty of new competition in 2009, which is only going to be good for consumers.Nokia has yet to play its cards.

Best Podcast – In the archives of the MediaBlather program that I do with David Strom, there were too many good interviews to choose just one. Among my favorites of 2008 were Mommycast, Brains on Fire/Fiskars, IDG’s Pat McGovern, Eric Schwartzman, Shel Israel and Brian Halligan of HubSpot. I think the most interesting podcast I listened to all year was Schwartzman’s interview with search-engine optimization expert Russell Wright.

Most Useful Blog Entry – Interactive Insights Group created a superlist of organizations using social media. You can find practically any case study on the Web by starting there. We have yet to hear what Tamar Weinberg has up her sleeve, though! Her 2007 superlist was a thing of beauty.

Best Article on the Media – The International Herald Tribune’s “Web Ushers in Age of Ambient Intimacy” explained the visceral appeal of Twitter and Facebook with admirable clarity. Eric Alterman’s epic examination of the collapse of the newspaper industry in The New Yorker was magnificent in its detail and insight.

Best Just For Fun – The most popular item in my newsletter is the squib about some crazy new Web resource we’ve found. Here are two of my favorites of 2008:

People always celebrate success, but they don’t give enough credit to really creative failure. Thank goodness, then, for The Fail Blog, a photographic tribute to failures big and small. Don’t look at this site in the office. Your colleagues will wonder why you’re laughing so hard. And don’t, under any circumstances, view it while you’re drinking milk, if you know what I mean…

Buddy Greene is the Yo-Yo Ma of the harmonica, and in this amazing clip from a Carnegie Hall concert, he will change forever your impressions of the capability and range of this tiny instrument.

Recommended Reading, 11/18/08

This 49-minute podcast from iMediaConnection’s Brand Summit interested me not so much for the marketing case study (although it’s a very good example of viral marketing) as for the honest description of the barriers these two Kraft brand managers confronted in selling their word-of-mouth marketing campaign. You won’t often hear corporate marketers speak so frankly about internal politics.

Adam and Tyler had to repeatedly sell the concept of giving up control over the message to skeptical colleagues, corporate lawyers and top management. Even after the campaign had successfully concluded, they still faced opposition. In some cases, they dealt with it by simply ignoring it or telling people what they wanted to hear. There’s also a good account around minute 40 of how they entered the blogosphere to engage with online critics when the guidance from management and legal was to remain silent. Here’s a link to a written interview, but you’ll get a fuller story from the podcast.

Josh Bernoff has a nice wrap-up of the blog/Twitter/Facebook storm that erupted this past weekend over J&J’s ill-considered “Motrin Moms” ad. The company could have avoided the whole mess by testing the ad with a group of moms, who are some of the most active online networkers. Such a simple way to avoid embarrassment and the cost would have been minimal. Now J&J’s smarting from the whole experience. McNeiil’s VP of marketing has the mea culpa here.

The credit company is experimenting with a Facebook community that offers small business owners a way to connect with each other and to get business management advice from Visa. More than 21,000 members have joined and the repeat-visit rate is twice the industry norm.

Here’s a novel promotion for the forthcoming movie “The Day the Earth Stood Still.” 20th Century Fox is creating a global participation campaign that enables people to vote on what they would save if the earth truly stood still. From the press release:

Earth’s Vital List, which launches today, poses the question, If the earth was under attack what would you save? Consumers are asked to build a “Vital List” of 12 items (people, places or things) they would save on “the day the earth stands still.” Vital lists can be shared with friends encouraging feedback and votes on which items are truly vital. The world’s most vital items will be tabulated on a global microsite. The site also provides visitors with a view on how items are being ranked around the globe.

I recently criticized corporate bloggers for spewing happy talk while the financial world melted down. So it was nice to see this profile of Marcy Shinder, VP of brand marketing and stategy for American Express OPEN. Amex responded quickly to the Wall Street crisis with a series of articles and multimedia messages aimed at small-to-medium businesses and outlining what the crisis means to them as well as steps they can take to survive the downturn.

Metrics expert Mark Ghuneim suggests that we still have a long way to go in evolving our thinking about viral video metrics beyond view counts. Marketers are beginning to think more holistically about how to measure success. Quoting:

According to a recent FEED Company study, some 70% of ad-agency and media-buying executives plan to increase budgets for viral video marketing in 2009. In addition, 72% of ad-agency executives and media buyers say their clients are “interested” or “very interested” in using viral video as an integral part of their marketing campaigns….

“Favoriting,” commenting, linking to, embedding, social network amplification and other action all constitute a level of user attention that must somehow be accounted for and given appropriate value.

In addition, a marketing executive would also want to know how users were discovering their video, as well as how quickly the view counts were growing. The velocity of consumption and adoption is an important indicator as well as factors beyond the standard impression and stream data. For example, are bloggers talking about the video? Are users micro-blogging about the video?

With an average member earning about $110,000 a year and more than $100 million in investment capital in the bank, you’d think LinkedIn would be sitting pretty. Yet the company is laying off about 36 people. Smart move. Don’t let VC love make you fat and happy.

Om Malik has little nice to say about Jerry Yang’s stewardship of Yahoo. Yang now basically admits he should have sold to Microsoft when he had the chance and the collapse of a partnership with Google is particularly painful. With the economy now in the tank, what’s next?

BusinessWeek is all breathless about the energy that social networks brought to election day, and there are some good stories/examples here. However, listen to NPR’s story on turnout levels for a more sobering view. Turnout was good for the US, but we still lag far behind other democracies.

Privacy advocates may blanch, but I think this is a totally cool way to mine patterns from search behavior that contributes to the common good. What an innovative idea!

How To Win in the Search-Driven Media World

Last week, I suggested that people’s information consumption habits have changed permanently as a result of tools like Google Alerts and RSS feeds. These technologies make it possible for people to subscribe to keywords rather than publications. While media brands will always matter, their importance will decline as people become more accustomed to selecting information by topic and new trusted brands emerge from the world of social media.

So what does this all mean to marketers? A lot. No longer is success a matter of placing messages in a few mass media outlets and hoping for the best. Marketers will need to segment their audiences and their media selections much more carefully in the future. That’s the bad news. The good news is that they also have the means to influence media more directly and even to become the media, if they so choose.

Segments

Let’s look at segmentation first. It’s no secret that the newspaper industry is in a terrible state. Circulation is declining between 6% and 10% annually and their audience is aging. A 2005 Carnegie Corp. survey estimated that the average age of a regular newspaper reader is now 55 and climbing. That figure is 61 for regular viewers of the TV evening news.

The trend is quite different in other media, however. Some print magazines are actually growing circulation. Runners World, for example, has added 200,000 subscribers in the last three years. In some emerging overseas markets, even newspapers are quite healthy. Also, while network television viewership is declining, some cable outlets are growing nicely.

This means you need to consider the audience you’re trying to reach and match it to the media you choose. Older customers can still be served effectively through mainstream media, while the under-30 age group requires a very different approach.

Segmentation also applies to interests. Technology enthusiasts have moved swiftly to the Web, a trend that has been dramatized by the collapse of many consumer electronics and corporate IT publications. However, traditional lifestyle media such as cooking, travel and fashion are holding up quite well. A big reason is that people interact differently with these products. Topics that are news- or transaction-driven migrate more quickly online than those that emphasize aesthetic appeal. The last time I checked, Brides magazine was still thick with ads.

You Are the Media

The more intriguing opportunity for marketers is to become the media. As I noted last week, search engines don’t have brand loyalty. The rise of super-bloggers like Michael Arrington and Robert Scoble demonstrate that trusted brands can grow quickly online. Regular readers may be tired of hearing me say this, but if you aren’t optimizing all of your business communications for search, you aren’t doing your job.

Google is now people’s first stop for information and insight on nearly every imaginable product. You can gain an unnatural advantage over even very large media brands by understanding which keywords bring people to your site and then optimizing around those terms. This is what I mean by “you are the media.”

But it isn’t just you. Other trusted brands are emerging online and those people can also be influenced to drive home your message. Using the right keywords in your communications to these new influencers can help drive your brand’s awareness through search. Sometimes you want to drive traffic to your own website, but at other times you may prefer the endorsement of a trusted third party. Again, the key factor is search optimization. Online media rely far more heavily on search visibility and external links than circulation lists. Use the same tools they use and you can piggyback on their success with astonishing speed.